Dollar Tree Debt

DLTR Stock  USD 69.46  1.44  2.03%   
Dollar Tree holds a debt-to-equity ratio of 1.251. At this time, Dollar Tree's Short and Long Term Debt Total is relatively stable compared to the past year. As of 10/08/2024, Net Debt is likely to grow to about 10.2 B, while Net Debt To EBITDA is likely to drop (0.73). . Dollar Tree's financial risk is the risk to Dollar Tree stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Dollar Tree's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Dollar Tree's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Dollar Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Dollar Tree's stakeholders.
For most companies, including Dollar Tree, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Dollar Tree, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Dollar Tree's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
2.0656
Book Value
34.326
Operating Margin
0.0275
Profit Margin
(0.03)
Return On Assets
0.0457
At this time, Dollar Tree's Total Current Liabilities is relatively stable compared to the past year. As of 10/08/2024, Liabilities And Stockholders Equity is likely to grow to about 23.1 B, though Change To Liabilities is likely to grow to (26.5 M).
  
Check out the analysis of Dollar Tree Fundamentals Over Time.
To learn how to invest in Dollar Stock, please use our How to Invest in Dollar Tree guide.

Dollar Tree Bond Ratings

Dollar Tree financial ratings play a critical role in determining how much Dollar Tree have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Dollar Tree's borrowing costs.
Piotroski F Score
8
StrongView
Beneish M Score
(2.75)
Unlikely ManipulatorView

Dollar Tree Debt to Cash Allocation

Many companies such as Dollar Tree, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Dollar Tree currently holds 10.39 B in liabilities with Debt to Equity (D/E) ratio of 1.25, which is about average as compared to similar companies. Dollar Tree has a current ratio of 1.35, which is within standard range for the sector. Note, when we think about Dollar Tree's use of debt, we should always consider it together with its cash and equity.

Dollar Tree Total Assets Over Time

Dollar Tree Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Dollar Tree uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Dollar Tree Debt Ratio

    
  4.88   
It seems most of the Dollar Tree's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Dollar Tree's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Dollar Tree, which in turn will lower the firm's financial flexibility.

Dollar Tree Corporate Bonds Issued

Dollar Short Long Term Debt Total

Short Long Term Debt Total

10.91 Billion

At this time, Dollar Tree's Short and Long Term Debt Total is relatively stable compared to the past year.

Understaning Dollar Tree Use of Financial Leverage

Dollar Tree's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Dollar Tree's current equity. If creditors own a majority of Dollar Tree's assets, the company is considered highly leveraged. Understanding the composition and structure of Dollar Tree's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last ReportedProjected for Next Year
Short and Long Term Debt Total10.4 B10.9 B
Net Debt9.7 B10.2 B
Short Term Debt1.5 B1.6 B
Long Term Debt3.4 BB
Short and Long Term Debt225 M337.4 M
Long Term Debt Total3.1 B3.8 B
Net Debt To EBITDA 6.30 (0.73)
Debt To Equity 0.68  0.06 
Interest Debt Per Share 23.02  0.16 
Debt To Assets 0.22  0.05 
Long Term Debt To Capitalization 0.32  0.03 
Total Debt To Capitalization 0.40  0.06 
Debt Equity Ratio 0.68  0.06 
Debt Ratio 0.22  0.05 
Cash Flow To Debt Ratio 0.54  3.80 
Please read more on our technical analysis page.

Additional Tools for Dollar Stock Analysis

When running Dollar Tree's price analysis, check to measure Dollar Tree's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Dollar Tree is operating at the current time. Most of Dollar Tree's value examination focuses on studying past and present price action to predict the probability of Dollar Tree's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Dollar Tree's price. Additionally, you may evaluate how the addition of Dollar Tree to your portfolios can decrease your overall portfolio volatility.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.